Dow Surges 101 Points as Technology Issues Rally

Stocks stormed higher Friday as technology issues staged a powerful rally and blue-chips posted one of the biggest gains ever.

U.S. bonds were little changed but rounded out the biggest one-week drop since July, amid signs the economy might be growing too fast.

The Dow Jones industrial average jumped 101.60 points, or 1.6%, to close at 6,544.09.

Unlike Thursday, when a late rally was largely contained to blue-chip issues, Friday’s advance showed much more broad support as advancing issues beat losers 5 to 2 on the New York Stock Exchange.

The rally wiped out a 101.10 point loss registered on the Dow on New Year’s Eve and narrowed blue-chip losses to 16.82 points for the week.

Even with the rally, the Dow’s rise was no match in percentage terms to that of the technology-rich Nasdaq composite index, which climbed 29.98 points to 1,310.68. The index was led by Intel, up 8 points to 138 3/8, amid new optimism about the economy and an improving outlook for semiconductor companies. The gain was second only to a 33.18-point rise posted on July 17.

Most of the other big technology names rallied with Intel, energizing the entire sector. Dow component IBM jumped 5 7/8--or the equivalent of 17 1/2 Dow points--to 159 1/8 as the biggest gainer in the blue-chip average. In Nasdaq trading, Dell Computer rose 4 5/8 to 55 7/8, Microsoft rose 3 to 84 5/8 and Cisco Systems added 2 3/4 to 65 3/8.

Analysts said the stock market’s sharp turnaround, which reversed most of the Dow’s losses for the week, showed equity investors had shaken off the jitters that a series of strong economic indicators had injected into the bond market.

“I think there’s renewed confidence the economy is still going to grow moderately, and you’re seeing that clearest in the techs,” said Peggy Farley, chief executive at Amas Securities.

Stocks drew some early support from bonds, which rose early in the day despite a Commerce Department report saying construction spending shot up 1.9% in November, the steepest advance in eight months.

The yield on the benchmark 30-year Treasury bond dropped to 6.73% from Thursday’s 6.74%, near a two-month high.

For the week, bonds fell 2 1/2 points, increasing yields 20 basis points.

The broad-based gains boosted the Standard & Poor’s 500-stock list 11.02 points to 748.03; the NYSE composite index 4.53 points to 394.06; and the American Stock Exchange composite index 3.29 points to 572.45.

Among Friday’s highlights:

* Among other rising technology shares, Silicon Graphics gained 2 1/8 to 26 5/8, Sun Microsystems rose 1 3/16 to 27 15/16 and Electronic Data Systems rose 1 5/8 to 43 3/4.

Other gainers included PC-makers Hewlett-Packard, up 1 1/2 to 51 7/8, Digital Equipment, ahead 3/4 to 36 1/4, and Compaq, up 4 to 76 3/8.

* State Street Boston jumped 8 1/8 to 71 on takeover speculation set off by news Bank of New York, up 7/8 to 24 1/8, was seeking approval to increase its stake in the company.

* Irvine-based FileNet sank 8 3/4 to 23 after the maker of optical storage systems said profit in the fourth quarter will fall 60% short of expectations.

* Cybercash tumbled 4 1/2 to 18 3/4 after Hambrecht & Quist questioned whether the Internet commerce firm had enough merchants to meet its revenue projections.

* HealthSouth gained 3 to 39 7/8 after the rehabilitation services provider said it will be added to the S&P; 500 index next week.

* Value Line fell 14 7/8 to 31 5/8 after the company said it paid an extraordinary dividend of $15 to shareholders.

* A number of retailers continued to tumble after reports of lower-than-expected holiday sales. Wet Seal fell 3 3/8 to 14 3/4 and CompUSA dropped 1 1/4 to 15.

Meanwhile, the dollar surged against most major currencies, boosted by the stock market rally and growing signs of strength in the domestic economy.

In New York, the dollar cost 116.43 Japanese yen, up from 115.52 Thursday and the highest level since March 1993.

Overseas, Frankfurt’s DAX index rose 0.4% and London’s FTSE-100 gained 0.8%. Japanese financial markets were closed.

Market Roundup, D4